<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PACIFIC GATEWAY PROPERTIES, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PACIFIC GATEWAY PROPERTIES, INC.
NOTICE OF SPECIAL IN LIEU OF ANNUAL MEETING AND PROXY STATEMENT
June 20, 1997
Dear Shareholder:
You are cordially invited to attend the Special in Lieu of Annual
Meeting of Shareholders of Pacific Gateway Properties, Inc., to be held on July
21, 1997, at the World Trade Club located in the World Trade Center which is the
clock tower building at the foot of Market Street on the Embarcadero waterfront
area, San Francisco, California.
While the meeting begins promptly at 9:00 a.m., the doors will be open
at 8:30 a.m. Members of the Board of Directors and the officers of the Company
welcome the opportunity to visit with shareholders on an informal basis during
the time preceding the meeting.
At the meeting you will be asked to elect directors for the coming
year and to consider and vote on such other business as may properly come before
the meeting. These matters are described in the accompanying proxy statement.
In addition, there will be a discussion of corporate events followed by a
question and answer period.
It is important that your shares are represented at the meeting
whether or not you plan to attend. Accordingly, please take a moment now to
fill in, sign, date and mail the enclosed proxy in the envelope provided.
Your cooperation is appreciated.
Sincerely,
Raymond V. Marino,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
PACIFIC GATEWAY PROPERTIES, INC.
930 MONTGOMERY STREET, 4TH FLOOR
SAN FRANCISCO, CA 94133
NOTICE OF SPECIAL IN LIEU OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 21, 1997
To the Shareholders of
Pacific Gateway Properties, Inc.:
NOTICE IS HEREBY GIVEN that a Special in Lieu of Annual Meeting of
Shareholders of PACIFIC GATEWAY PROPERTIES, INC. (the "Company"), will be held
at the World Trade Club located in the World Trade Center which is the clock
tower building at the foot of Market Street on the Embarcadero waterfront area,
San Francisco, California, on July 21, 1997, at 9:00 a.m., for the following
purposes:
A. To elect eight directors; and
B. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on June 20,
1997 as the record date for the determination of shareholders entitled to vote
at the meeting.
At its meeting on May 16, 1997, the Board of Directors amended Section
4.3 of the By-Laws of the Company to increase the number of directors
constituting the entire Board of Directors from seven to eight. Section 4.3 of
the By-Laws, as so amended, reads as follows:
"4.3 NUMBER. The number of directors constituting the entire
Board of Directors shall be eight (8). Such number may be increased
up to the maximum number permitted by Article SIXTH of the Certificate
of Incorporation or decreased to any number not less than three by
amendment to these By-Laws."
Shareholders who do not expect to attend in person and who wish their
shares to be voted are urged to fill in, sign, date and return the accompanying
form of proxy in the enclosed envelope, to which no postage need be affixed if
mailed in the United States.
By order of the Board of Directors,
Christopher M. Watson,
SECRETARY
June 20, 1997
San Francisco, California
The Annual Report of the Company on Form 10-K, including financial
statements for the year 1996, are being sent to shareholders concurrently with
this Notice.
<PAGE>
PACIFIC GATEWAY PROPERTIES, INC.
930 MONTGOMERY STREET, 4TH FLOOR
SAN FRANCISCO, CA 94133
PROXY STATEMENT
SPECIAL IN LIEU OF ANNUAL MEETING OF SHAREHOLDERS
JULY 21, 1997
This proxy statement is furnished to holders of the Common Stock, par
value $1.00 per share ("Common Stock"), of PACIFIC GATEWAY PROPERTIES, INC.
(hereinafter called the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company to be used at the Special in
Lieu of Annual Meeting of Shareholders of the Company (the "Meeting") to be held
at the World Trade Club in the World Trade Center which is the clock tower
building at the foot of Market Street on the Embarcadero waterfront area, San
Francisco, California, on July 21, 1997, at 9:00 a.m., and at any adjournment or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Special in Lieu of Annual Meeting of Shareholders.
If the accompanying form of proxy is executed and returned, it may
nevertheless be revoked at any time insofar as it has not been exercised. All
properly executed, unrevoked proxies in the enclosed form which are received in
time will be voted in accordance with the shareholders' directions and, unless
contrary directions are given, will be voted for the election as directors of
the nominees named below. It is anticipated that this proxy statement and the
enclosed proxy will be first mailed to record holders of the Company's Common
Stock on or about June 30, 1997.
The Board of Directors has fixed the close of business on June 20,
1997, as the record date for the determination of shareholders entitled to
receive notice of and vote at the Meeting. As of June 20, 1997, the Company had
outstanding 3,892,596 shares of Common Stock. Each share of Common Stock is
entitled to one vote.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Under the rules of the Securities and Exchange Commission any proposal
of a shareholder intended to be presented at the Company's 1998 Annual Meeting
of Shareholders must be received by the Company for inclusion in the proxy
statement and form of proxy a reasonable time before the Company begins the
proxy solicitation for that meeting.
ELECTION OF DIRECTORS
Eight directors are to be elected at the Meeting, each to hold office
until the next Annual Meeting of Shareholders and until his successor is chosen
and qualified. The Board of Directors does not contemplate that any nominee
will be unable to serve as a director for any reason; however, if that should
occur prior to the Meeting, the proxy holders may select another nominee to
stand for election in his place and stead.
<PAGE>
The following table sets forth certain information concerning the
nominees for director:
Nominees
- - --------------------
Steven A. Calabrese Age 36; since prior to 1992, managing partner of
Calabrese, Racek and Markos, Inc., CRM Construction
Inc. and CRM Environmental Services, Inc., firms which
specialize in evaluations, management, construction and
environmental assessment services for commercial and
industrial real estate; owner and manager of a real
estate portfolio.
Mark D. Grossi Age 43; Executive Vice President and director of
Charter One Financial, Inc., a savings and loan holding
company, and Executive Vice President and Chief Retail
Banking Officer of its subsidiary, Charter One Bank;
since prior to 1992, holder of various senior executive
positions with Charter One Bank and its predecessor.
Lawrence B. Helzel Age 49; director of the Company since May 1995; since
prior to 1992, member, Pacific Stock Exchange, Inc.
(Self employed market maker, options floor); co-founder
Buylar Investments, Inc., a real estate investment
company.(A)
Marshall A. Jacobs Age 78; director of the Company since February 1984;
since January 1992, Of Counsel to the law firm of
Jacobs Persinger & Parker, prior thereto, senior
partner in the firm.(B)
Christopher L. Jarratt Age 35; director of the Company since May 1997; since
prior to 1992, President, Jarratt Associates, Inc., a
company engaged in commercial mortgage banking and
commercial real estate investment activities and since
September 1996, Chief Executive Officer of Third
Capital, LLC, a company engaged in various real estate
investment and advisory activities.
Raymond V. Marino Age 38; director of the Company since March 1996 and
President and Chief Executive Officer since January
1996; prior thereto from August 1992, Vice President of
the Company; prior thereto, Vice President of Finance
and Controller, Hunting Gate Investments, Inc., a real
estate investment and management company.
Richard M. Osborne Age 51; director and Chairman of the Board of Directors
of the Company since May 1997; since prior to 1992
President and Chief Executive Officer of OsAir, Inc., a
manufacturer of industrial gases for pipeline delivery
and a real property developer; director of Brandywine
Realty Trust and Great Lakes Bank.
Martin S. Roher Age 47; director of the Company since May 1995; since
prior to 1992, general partner and managing partner of
MSR Capital Partners, a limited partnership engaged in
securities investments.(B)
- - -------------------------------------------
(A) Member of the Audit Committee.
(B) Member of the Compensation Committee
<PAGE>
Since February 1997, entities controlled by Richard M. Osborne have
purchased approximately 39.6% of the Company's outstanding Common Stock for an
aggregate purchase price of approximately $8.5 million in a number of negotiated
transactions and open market purchases. Of the total purchase price,
approximately $6.4 million was provided from the working capital of two of the
purchasing entities and the balance was provided by margin loans from the Everen
Securities, Inc. and Smith Barney, Inc. Included as sellers were John V.
Winfield and H. Todd Cobey, Jr. and entities related to them, a firm related to
Martin S. Roher and entities related to David E. Post. At the time of their
respective sales Messrs. Winfield and Cobey were directors of the Company but
have since resigned. Mr. Roher is a director of the Company and a nominee for
reelection at the Meeting. Mr. Post is a director of the Company but is not
standing for reelection.
Mr. Osborne was elected a director and Chairman of the Board of
Directors of the Company at a meeting of the Board in May 1997. By agreement
dated March 12, 1997, Mr. Osborne agreed to use his best efforts to nominate
Christopher L. Jarratt as a director of the Company and Mr. Jarratt was also
elected to the Board at the May 1997 directors meeting.
Directors who are not officers of the Company receive an annual fee of
$7,500 and supplemental fees of $750 for each meeting of the Board or a
committee thereof attended, and $375 for each telephone meeting, plus
out-of-pocket expenses incurred in connection with services rendered to the
Company and travel and lodging for each Board meeting.
The Board of Directors of the Company held five meetings in 1996. The
Board does not have a Nominating Committee. The duties of the Audit Committee
of the Board are to oversee the audit function of the Company's independent
certified public accountants, to periodically review significant financial
information relating to the Company and to act as a communication link between
the Board and such certified public accountants. The duties of the Compensation
Committee of the Board are to make recommendations to the Board with respect to
the compensation package of the Chief Executive Officer, to review the Chief
Executive Officer's recommendations as to the compensation packages of the other
officers of the Company and to award grants under and otherwise administer the
Company's stock option plans. The Audit Committee met two times in 1996. The
Compensation Committee met once in 1996. During 1996, each director attended at
least 75% of the meetings of the Board of Directors and committees of which he
was a member.
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information concerning the
beneficial ownership of shares of Common Stock of the Company by persons who the
Company knows to own beneficially more than 5% of the outstanding Common Stock
and by the directors, nominees for election as directors and executive officers
of the Company.
Shares Percent
Beneficially of
Owned(1) Class
------------ -------
Citicorp Real Estate, Inc. 1,000,000 (2) 20.4
a subsidiary of Citibank, N.A.
725 S. Figueroa Street
4th Floor
Los Angeles, CA 90017
(CONTINUED)
<PAGE>
Shares Percent
Beneficially of
Owned(1) Class
------------ -------
Richard M. Osborne Trust 1,540,328 (3) 39.6
Turkey Vulture Fund XIII, Ltd.
and Liberty Self Stor, Ltd.
7001 Center Street
Mentor, OH 44060
Third Capital, LLC 200,000 (4) 5.1
314 Church Street
Nashville, TN 37201
DIRECTORS, NOMINEES AND EXECUTIVE
EXECUTIVE OFFICERS
---------------------------------
Steven A. Calabrese 27,000 *
Mark D. Grossi 264,800 6.8
30962 Riviera Lane
Westlake, OH 44145
Lawrence B. Helzel 40,000 *
Marshall A. Jacobs 200 *
Christopher L. Jarratt 200,000 (4) 5.1
Raymond V. Marino 74,900 (5) 1.9
Richard M. Osborne 1,540,328 (3) 39.6
David E. Post -0- -0-
Martin S. Roher 175,000 (6) 4.5
Christopher M. Watson 22,705 (5) *
Andrew T. Gorayeb 7,000 (5) *
All directors, nominees and executive
officers (11 persons)
as a group 2,146,433 53.7
- - ------------------------------------
*Less than 1%
(1) Beneficial ownership is the direct or indirect ownership of Common Stock of
the Company including the right to control the vote or investment of or
acquire such Common Stock within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934. Unless otherwise indicated, each
beneficial owner has sole
<PAGE>
voting and investment power with respect to the shares shown and reported
ownership is as of June 20, 1997.
(2) Based on information contained in Schedule 13D for Citicorp Real Estate,
Inc., dated December 30, 1993. Represents shares of Common Stock issuable
upon exercise of presently exercisable warrants.
(3) According to information provided in Amendment No. 1 to Schedule 13D dated
April 28, 1997 filed by the Richard Mr. Osborne Trust (the "Trust"), Turkey
Vulture Fund XIII, Ltd. (the "Fund") and Liberty Self Stor, Ltd.
("Liberty") as a group, and other information provided to the Company, the
Trust beneficially owns 815,600 shares (21.0%), the Fund beneficially owns
268,832 shares (6.9%) and Liberty beneficially owns 455,906 shares (11.7%).
Richard M. Osborne as sole trustee of the Trust, sole manager of the Fund
and sole managing member of Liberty may be deemed to beneficially own all
of said 1,540,328 shares.
(4) Based upon information provided in Schedule 13D dated May 19, 1997 filed by
Third Capital, LLC. Represents shares of Common Stock issuable upon
exercise of presently exercisable warrants issued to Third Capital, LLC by
the Richard M. Osborne Trust. Christopher L. Jarratt is Chief Executive
Officer of Third Capital, LLC and may be deemed to beneficially own said
securities.
(5) Represents shares issuable upon exercise of options to purchase Common
Stock which were exercisable at June 20, 1997 or which may become
exercisable within 60 days thereafter.
(6) The shares are owned by MSR Capital Partners. Mr. Roher is the sole
general partner of MSR Capital Partners and may be considered to
beneficially own such shares.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon reports it has received and other information, the Company
believes that all of its security holders, directors and officers who were
required to file reports of beneficial ownership of the Company's Common Stock
under Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
in respect of 1996 and prior periods have done so and their filings for 1996
were on a timely basis except that: David E. Post who first became a director
in 1993 has not filed his initial report or any reports of changes of ownership;
Raymond V. Marino, President and a director and Christopher M. Watson and Andrew
T. Gorayeb, officers, were late in reporting the stock options granted to them
in 1996 which were described in the Company's proxy statement for the Special in
Lieu of Annual Meeting of Shareholders held October 29, 1996; Felecia Vernon -
Chancey, who was an officer from June 1996 until March 1997, was late in filing
her initial report; Lawrence B. Helzel was late in filing one report of three
purchases in 1996 of an aggregate of 3,500 shares of Common Stock; and Citicorp
Real Estate, Inc., although having reported its 1993 acquisition from the
Company of warrants to purchase Common Stock on Exchange Act Schedule 13D, has
not reported its deemed beneficial ownership of in excess of 10% of the
Company's Common Stock as required by the regulations under Section 16(a) of the
Exchange Act.
EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth individual
compensation information for each of the Company's last three fiscal years of
the Chief Executive Officer ("CEO") and other most highly paid executive
officers who were serving as such at the end of the Company's fiscal year ended
December 31, 1996, and whose total annual salary and bonus for such fiscal year
exceeded $100,000.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
------------------------- -------
Stock All Other
Name and Principal Position Year Salary Bonus Options Compensation(1)
- - --------------------------- ---- ------ ----- ------- ---------------
Raymond V. Marino (2) 1996 $150,000 $50,000 100,000 $ --
President and CEO 1995 95,000 30,000 -- 2,850
1994 91,553 25,000 6,175 --
Christopher M. Watson (3) 1996 100,000 30,000 35,000 34,906
Executive Vice President 1995 70,000 30,000 -- 22,459
1994 70,000 30,000 6,175 82,007
Andrew T. Gorayeb (4) 1996 80,000 49,000 15,000 --
Vice President-Finance 1995 70,000 20,000 -- --
1994 8,750 2,500 10,000 --
- - ------------------------------------
(1) Other compensation in the form of personal benefits to the named person has
been omitted because it does not exceed the lesser of $50,000 or 10% of the
total annual salary and bonus to each.
(CONTINUED)
<PAGE>
(2) Mr. Marino became President and CEO as of January 1996. Mr. Marino had
been a Vice President of the Company since August 1992. His other
compensation in 1995 is a simplified employee pension contribution.
(3) Mr. Watson joined the Company as a Vice President in September 1992 and
became Executive Vice President as of January 1996. His other compensation
consisted of lease commissions of $31,906 in 1996, $17,359 in 1995 and
$79,007 in 1994 and an auto allowance of $3,000 in each year, and $2,100
for a simplified employee pension contribution in 1995.
(4) Mr. Gorayeb joined the Company as Director of Finance in November 1994 and
became Vice President - Finance as of January 1, 1996.
OPTION TABLES
The following table contains information concerning the 1996 grants by
the Company to the three executive officers named above of options to purchase
Common Stock of the Company.
OPTION GRANTS IN 1996
Individual Grants
------------------------------------------------------------
% of Total
Number of Options Grant
Securities Granted to Exercise Date
Underlying Employees or Base Present
Options In Fiscal Price Expiration Value (2)
Name Granted (1) Year ($/sh) Date ($)
- - -------------------- ----------- --------- ------- --------- -----------
Raymond V. Marino 100,000 66 2/3 2.56 3/21/06 168,000
Christopher M. Watson 35,000 23 1/3 2.56 3/21/06 58,800
Andrew T. Gorayeb 15,000 10 2.56 3/21/06 25,200
- - ------------------------------------
(1) The options were granted on March 21, 1996, at the fair market value on
that date, under the Company's 1996 Stock Option Plan, subject to
shareholder approval which was obtained in November 1996 when the Plan was
approved by the shareholders. Mr. Marino's options were immediately
exercisable as to 40,000 shares with the balance becoming exercisable in
20,000 share increments on January 1, 1997, December 31, 1997 and December
31, 1998. The other options become exercisable in five equal annual
installments commencing with the first anniversary of the grant date.
(CONTINUED)
<PAGE>
(2) The grant date values were derived applying the Black-Scholes option
pricing model using the following assumptions: expected dividend yield-0%;
expected volatility - 43.4%; risk free interest rate - 6.29%; and expected
life - 10 years. No prediction of the future performance of the Company's
Common Stock is intended by this presentation. The actual value which an
officer may receive from his option will depend on the relationship between
the market price for the Common Stock at the time the option is exercised
and the option exercise price.
The following table sets forth the values at the end of 1996 of the
options to purchase Common Stock of the Company held by the three officers named
above. None of these officers exercised any options in 1996.
FISCAL YEAR END OPTION VALUES
Values of
Number of Unexercised In-
Unexercised the-Money
Options at Options at
12/31/96 12/31/96 $(1)
------------- ---------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
Raymond V. Marino 54,470/66,705 29,000/41,625
Christopher M. Watson 14,470/41,705 3,375/24,906
Andrew T. Gorayeb 4,000/21,000 -- /10,313
- - ------------------------------------
(1) The closing sale price for the Company's Common Stock on December 31, 1996
as reported on the American Stock Exchange consolidated reporting system
was $3.25 per share.
EMPLOYMENT CONTRACT WITH EXECUTIVE. Raymond V. Marino was employed by
the Company in 1996 under an employment agreement which was renewed on slightly
modified terms to apply to future years and pursuant to which Mr. Marino is to
be the chief executive officer, president and a director of the Company at an
annual base salary of $150,000 plus a bonus determined by the Board of
Directors. The current employment agreement is for an initial term of two years
commencing January 2, 1997, and will automatically be extended for additional
one-year terms unless either party elects not to extend the term. If the
Company makes the election, Mr. Marino will be entitled (i) to receive his base
salary for a period of 24 months following expiration and a bonus equal to the
average of any annual bonuses he may have earned with respect to the immediately
preceding two full calendar years of his employment or, if greater, the bonus,
if any, Mr. Marino has received in respect of his 1996 employment, and (ii) to
exercise all vested options which have been granted to him for a period of 12
months from the date of expiration. If the Company otherwise terminates the
employment agreement without cause or if Mr. Marino terminates the employment
agreement because of a reduction in his responsibilities or compensation or a
change in his employment location, Mr. Marino will be entitled to receive the
termination compensation described above and the vesting period of any unvested
options granted to Mr. Marino will accelerate and such options and all
previously vested options will be exercisable for a period of 12 months from the
date of termination. In the event of a termination of Mr. Marino's employment
at his election within 12 months following a change in control of the Company
(as defined in the employment agreement), he will be entitled to receive the
termination compensation described above, including the acceleration of the
vesting of his options, but the period for exercising any options will be three
months from termination. If, following change in control, Mr. Marino agrees to
remain employed under different terms of employment than those contained in his
<PAGE>
employment agreement, he will be entitled to be paid in addition to his
compensation under the new employment arrangement his base salary for the
remainder of his then current employment term.
Each of Mr. Watson and Mr. Gorayeb has a severance arrangement with
the Company under which he is entitled to receive one year's base salary if the
Company terminates his employment within one year following a change in its
control.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The responsibilities of the Compensation Committee include making
recommendations to the Board concerning the compensation package of the chief
executive officer and reviewing his recommendations concerning compensation of
other Company officers. The Committee also administers the Company's stock
option plans.
The Committee favors the fairly typical structure of a compensation
package for executive officers comprised of a base salary, short-term incentive
compensation in the form of an annual bonus and long-term incentive compensation
through the grant of Common Stock purchase options. The Company is relatively
small with only three executive officers and the levels of compensation for them
have been fixed largely based upon perceptions of compensation levels of
comparable personnel in the San Francisco Bay area.
The Committee believes that the executive officers were effective in
1996 in achieving improved rentals for the Company's properties, in closing the
sale of two of the Company's larger properties, in obtaining favorable
refinancings of other properties and in identifying new properties for the
Company to acquire. The Company does not have a formal bonus plan. It was the
view of the chief executive officer in which the Committee concurred that 30% of
base salary should be the maximum bonus payable to those other executive
officers whose 1996 performance was judged superior with lesser amounts payable
where performance, although of high quality was not judged to have reached the
very highest level. The 1996 bonuses for executive officers other than the
chief executive officer were based upon the recommendations of the chief
executive officer who, in turn based his recommendations, in large part, on his
opinion of those officers' contributions to the Company's performance. An
additional 1996 bonus was awarded to Mr. Gorayeb in recognition of his
contributions in 1995 and 1996 to a number of the more important transactions
completed by the Company in 1996.
The 1996 stock option grants to executive officers, all of which were
made in March, were also determined on a subjective basis. These grants were
approved by the shareholders at the 1996 meeting of shareholders of the Company
when the 1996 stock option plan was approved.
CHIEF EXECUTIVE OFFICER COMPENSATION. In March 1996 the Company
reached agreement with Mr. Marino concerning his employment in 1996 as chief
executive officer retroactive to January of that year and on October 29, 1996 in
recognition of the positive performance of the Company referred to above
extended the agreement on a slightly modified basis for another two years. The
terms of the agreement as now in effect are described above under the caption
"EMPLOYMENT CONTRACT WITH EXECUTIVE". Mr. Marino's base salary and option grant
were established through arm's length negotiations at levels which were
believed, without independent study, to be comparable to what would have been
available to Mr. Marino at a company similar to the Company. The 1996 bonus for
Mr. Marino of $50,000 (33 1/3% of his base salary) was based upon the
Committee's opinion of his contribution to the Company's 1996 performance.
Section 162(m) of the Internal Revenue Code, enacted in 1993,
generally disallows a tax deduction to public companies for compensation over
$1,000,000 paid to each of the company's chief executive officer and the four
other most highly compensated executive officers. Because of the range of
compensation paid by the Company to its executive officers, the Compensation
Committee has not established any policy regarding annual compensation to such
executive officers in excess of $1,000,000.
<PAGE>
THE COMPENSATION COMMITTEE
Marshall A. Jacobs, CHAIRMAN
Martin S. Roher
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. Mr.
Jacobs is Of Counsel to the law firm of Jacobs Persinger & Parker. Such law
firm has performed services for the Company for which it was paid $214,700 in
1996 and is performing services for the Company in 1997.
<PAGE>
PACIFIC GATEWAY PROPERTIES, INC. (PGP)
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG PGP, DOW JONES GLOBAL MARKET INDEX-US AND DOW JONES REAL
ESTATE INVESTMENT INDEX-US**
FISCAL YEAR ENDING DECEMBER 31ST
[GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Pacific Gateway Properties $100 $54 $77 $82 $59 $67
Dow Jones Equity Market Index $100 $109 $119 $121 $166 $206
Dow Jones Real Estate Market Index $100 $90 $106 $100 $124 $166
</TABLE>
Assumes $100 invested on 12/31/91 in PGP
Common Stock, the Dow Jones Global Market Index-US
and the Dow Jones Real Estate Investment Index-US.
* Total return assumes reinvestment of dividends.
** Fiscal year ending December 31.
The above graph compares the performance of the Company with that of the Dow
Jones Global Market Index-US (formerly the Dow Jones Equity Market Index) and
the Dow Jones Real Estate Investment Index-US.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no matters which will be presented for
consideration at the Meeting other than the election of directors referred to in
this proxy statement. Should any other matters properly come before the
meeting, it is the intention of the persons named in the accompanying proxy to
vote such proxy in accordance with their best judgement.
VOTING PROCEDURES
A shareholder who abstains from a vote by registering an abstention
vote will be deemed present at the Meeting for quorum purposes but will not be
deemed to have voted on the particular matter. Similarly, in the event a
nominee holding shares for beneficial owners votes on certain matters pursuant
to discretionary authority or instructions from beneficial owners, but with
respect to one or more other matters does not receive instructions from
beneficial owners and does not exercise discretionary authority (a so-called
"non-vote"), the shares held by the nominee will be deemed present at the
Meeting for quorum purposes but will not be deemed to have voted on such other
matters. Directors are elected by a plurality of the votes cast by the holders
of shares entitled to vote in the election and abstentions and non-votes have no
effect.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company and its
subsidiaries included in the Company's 1996 Annual Report on Form 10-K have been
examined by Arthur Andersen LLP. A representative of Arthur Andersen LLP is
expected to attend the Meeting with the opportunity to make a statement if he so
desires. It is expected that such representative will be available to respond
to appropriate questions from shareholders.
SOLICITATION OF PROXIES
The Company will bear the cost of this solicitation of proxies. In
addition to solicitation of proxies by mail, the Company will reimburse brokers
and other nominees for the expense of forwarding proxy materials to the
beneficial owners of stock held in their names. Directors, officers and
employees of the Company may also solicit proxies on behalf of the Board of
Directors but will not receive any additional compensation therefor.
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHAREHOLDERS ARE URGED TO FILL IN, SIGN, DATE AND RETURN THE ACCOMPANYING FORM
OF PROXY IN THE ENCLOSED ENVELOPE.
By order of the Board of Directors
Christopher M. Watson,
SECRETARY
San Francisco, California
June 20, 1997
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, THE COMPANY WILL PROVIDE A COPY OF
ITS ANNUAL REPORT ON FORM 10-K FOR 1996, AS AMENDED, INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. ANY REQUEST SHOULD BE DIRECTED TO RAYMOND V. MARINO, PRESIDENT AND
CEO, PACIFIC GATEWAY PROPERTIES, INC., 930 MONTGOMERY STREET, 4TH FLOOR, SAN
FRANCISCO, CA 94133, TELEPHONE NUMBER (415) 398-4800, EXTENSION 119, FACSIMILE
NUMBER (415) 398-4841. THERE WILL BE NO CHARGE FOR SUCH REPORT UNLESS ONE OR
MORE EXHIBITS THERETO ARE REQUESTED, IN WHICH CASE THE COMPANY'S REASONABLE
EXPENSES OF FURNISHING EXHIBITS MAY BE CHARGED.
<PAGE>
PROXY
PACIFIC GATEWAY PROPERTIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL IN LIEU OF ANNUAL MEETING OF SHAREHOLDERS
WORLD TRADE CLUB
WORLD TRADE CENTER
SAN FRANCISCO, CA
JULY 21, 1997, 9 A.M. LOCAL TIME
The undersigned hereby appoints Marshall A. Jacobs and Raymond V. Marino
and each of them acting alone, with full power of substitution, as attorneys and
proxies to vote all of the shares of Common Stock of Pacific Gateway Properties,
Inc. (the "Company") which the undersigned is entitled to vote at the Special in
Lieu of Annual Meeting of Shareholders of the Company to be held July 21, 1997
and any adjournment or adjournments thereof, upon the proposal set forth on the
reverse hereof and upon all other matters which come before said meeting or any
adjournment or adjournments thereof. The Board of Directors recommends a vote
FOR proposal 1.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
<PAGE>
DETACH HERE
/ X / PLEASE MARK VOTES AS IN THIS EXAMPLE.
PLEASE MARK, SIGN, DATE AND MAIL YOUR PROXY PROMPTLY IN THE ENVELOPE
PROVIDED.
1. FOR election of eight (8) Directors as described in the Proxy
Statement of the Board of Directors.
NOMINEES: S.A. Calabrese, M.D. Grossi, L.B. Helzel, M.A. Jacobs,
C.L. Jarratt, R.V. Marino, R.M. Osborne, M.S. Roher
/ / FOR ALL NOMINEES / / WITHHOLD FROM ALL NOMINEES
/ /
------------------------------------------
For all nominees except as noted above
MARK HERE / / MARK HERE / /
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
If stock is held in the name of more than one person, all holders
should sign. Sign exactly as name or names appear hereon. Persons
signing in a fiduciary capacity should include their title as such.
Signature: Date:
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Signature: Date:
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